U.S. Stocks Rise as Boehner, Obama Fuel Optimism on Talks

Nov. 28 (Bloomberg) -- U.S. stocks rose, erasing an earlier
loss for the Standard & Poor’s 500 Index, after comments by
Speaker of the House John Boehner and President Barack Obama
fueled optimism an agreement can be reached in budget talks.

The S&P 500 climbed 0.8 percent to 1,409.93 in New York,
after erasing a decline of as much as 1 percent. The Dow Jones
Industrial Average added 106.98 points, or 0.8 percent, to
12,985.11 today. About 6.1 billion shares traded hands on U.S.
exchanges today, in line with the three-month average, according
to data compiled by Bloomberg.

Obama “was confident of something being done by the end of
the year,” Thomas Garcia, head of equity trading at Santa Fe,
New Mexico-based Thornburg Investment Management Inc., said in
an e-mail. His firm oversees about $80 billion. “This is
something that the market is worried about not getting done by
year-end, so if they can get it done, it would provide some
relief. The market doesn’t like uncertainty.”

Equities reversed declines as Boehner, an Ohio Republican,
said he is optimistic lawmakers engaged in budget talks can
“avert this crisis sooner rather than later.” He made his
remarks to reporters, while saying he continues to oppose the
expiration of tax cuts for top earners and Democrats need to get
“serious” on budget cuts. Obama said separately at the White
House, “My hope is to get this done before Christmas.”

Blankfein Meeting

Stocks fell earlier after Erskine Bowles, co-chairman of
Obama’s 2010 fiscal commission, said it’s unlikely the president
and Congress will reach a deal by the end of this year. The
president met with business leaders today, including Goldman
Sachs Group Inc. Chief Executive Officer Lloyd Blankfein.

The S&P 500 has declined 1.3 percent since Obama was re-elected on Nov. 6 as he seeks a budget agreement with the
Republican-controlled House. The deal is aimed at avoiding $607
billion of automatic tax increases and spending cuts that come
into effect next year.

Sales of new U.S. homes dropped 0.3 percent to a 368,000
annual pace following a revised 369,000 rate in September that
was weaker than initially reported, figures from the Commerce
Department showed today in Washington. The median estimate of 74
economists surveyed by Bloomberg called for a 390,000 sales
pace.

Beige Book

The U.S. economy expanded at a “measured pace” in recent
weeks as gains in consumer demand and housing were tempered by a
slowdown in manufacturing and the impact of superstorm Sandy,
the Federal Reserve said today in its Beige Book business
survey, which is based on reports from the Fed’s 12 district
banks.

The report indicates that Fed policy makers are unlikely to
curtail monthly purchases of $40 billion in housing debt to
boost the three-year economic expansion. It also bolsters Fed
Chairman Ben S. Bernanke’s view that an agreement on reducing
long-term federal budget deficits without abrupt tax increases
and spending cuts would remove a barrier to growth.

“The market is at the mercy of the fiscal cliff until we
get some sort of resolution,” Liz Ann Sonders, the New York-based chief investment strategist at Charles Schwab Corp., which
has $1.9 trillion in client assets, said by phone. “The worst
scenario in general, particularly for psychology, would be just
a total can kick -- something like, ‘We can’t come up with a
solution. We’re just going to kick this thing six months down
the road, without giving the market a path between now and
then.’”

Special Dividends

Costco advanced 6.3 percent for the biggest gain in the S&P
500 to $102.58. The largest U.S. warehouse-club chain said it
plans to pay shareholders a special dividend totaling about $3
billion. Costco is among more than 16 companies in the Russell
1000 Index that have set a special dividend this quarter,
according to data compiled by Bloomberg. Dillard’s Inc., Las
Vegas Sands Corp. and Carnival Corp. are among the others.

“We would expect this trend to continue through year-end,” Dane Mott, a San Francisco-based accounting analyst at
JPMorgan Chase & Co., wrote yesterday in a report. Mott, based
in San Francisco, wrote that companies are seeking to “take
advantage of the favorable tax treatment for dividends in 2012
relative to the potential environment in 2013.”

Payouts made this year are subject to a 15 percent federal
tax. Next year’s rate may rise to as high as 43.4 percent as
part of the fiscal cliff.

Advanced Micro Devices Inc. rose 4.3 percent to $1.96.
Reuters reported that the second-largest maker of personal-computer processors is selling its Austin, Texas, campus to
raise cash. The Sunnyvale, California-based company expects to
raise as much as $200 million in the sale, Reuters reported,
citing an unnamed spokesman.

Knight Capital climbed 15 percent to $3.42. Getco, the
Chicago-based high-frequency trader, offered cash and stock that
values Knight at $3.50 a share, an 18 percent premium from
yesterday’s close, according to a filing today.

Virtu submitted a bid to buy Knight for about $3 a share, a
person with direct knowledge of the matter said. Knight was
bailed out by six financial companies in August after losing
more than $450 million in a trading malfunction.

Green Mountain

Green Mountain Coffee Roasters Inc. surged 27 percent to
$36.86 after reporting fourth-quarter earnings that beat
projections. Chief Executive Officer Lawrence Blanford has
sought to boost sales with a new Keurig machine that makes milk-based drinks. Blanford also developed an espresso maker with
Luigi Lavazza SpA that went on sale in time for the holidays.

Principal Financial Group Inc. declined 1.9 percent to
$26.80. The U.S. insurer that agreed to buy a Chilean pension
provider for $1.5 billion last month gave a 2013 outlook that
fell short of some estimates.